Stocks looked set to resume their advance Tuesday, inspired by a rally overnight on Wall Street and expectations that Operation Pillar of Defense was coming to a close. But the mood turned sour late in the session after two rockets fell near Jerusalem.

The TA-25 index of blue chips, which had traded as high as 1,212,31, ended the day down 0.1% at 1,204.9. The TA-100 edged down 0.2% to 1061.71. But turnover was a respectable NIS 828.5 million.

TA-Banking led the way lower, dropping 0.7% to finish at 1,087.85, but nearly all the other indices finished the day higher, with technology shares performing strongly.

The BlueTech-50 index rose 0.5% to 328.91, with several shares rallying strongly - among them Clal Biotechnology adding 10.5%; EZchip, 4%; Orbit, 15.5%; and Bio Light, 5.5%. The latter said its Micromedic unit had won Chinese regulatory approval to market its CellDetect cancer diagnostic tool.

The session had gotten off to a strong start on the back of U.S. stocks, which rose smartly on Monday as investors were encouraged by the early tone in talks to tackle the fiscal crunch and data that showed continued improvement in the housing recovery.

Meanwhile, Israeli and Egyptian officials were saying that a cease-fire would go into effect by yesterday evening, adding that the deal's last points would be finalized in a meeting between Prime Minister Benjamin Netanyahu and U.S. Secretary of State Hillary Clinton.

But late in the afternoon two rockets fell near Jerusalem, and two others in Ashdod. In addition, world shares fell yesterday on weak U.S. corporate results and after France lost its top credit rating from Moody's.

In the foreign currency market, the shekel strengthened against the dollar to a Bank of Israel rate of NIS 3.9240, a gain of 0.4%, while against the euro it was fixed at 5.027, a gain of 0.06%. In late trading, the dollar was trading at NIS 3.9067.

"We are approaching money time," said Nir Peleg of the Kryptonite hedge fund management company. "The market has been waiting for one of two developments - either an entry [into Gaza] or a cease-fire, each of which will have a different impact."

"A cease-fire is what the market is expecting, which will remove the uncertainty and allow Israel to return to normalcy," said Peleg. "Against that, an escalation and a land incursion will be priced much less positively. An incursion will increase uncertainty a lot, so the market isn't happy about that prospect."

Yitzhak Tshuva's Delek Group ended up 0.8% yesterday after its Delek Petroleum unit sold a 3.7% stake in its U.S. subsidiary, Delek U.S. Holdings, to a foreign financial institution for $57 million. In another asset sale, Industrial Buildings gained 0.4% on news it sold an 18% stake in a Thai property for NIS 126 million and expected to record a NIS 44 million gain on the sale.

Clal Industries advanced 2.1%, and S&P Maalot changed the outlook on its credit rating for the industrial holding company to Stable from Negative, retaining its A-minus rating. The credit rating agency cited its acquisition by Access Industries from Nochi Dankner's financially troubled IDB group.

Clal Insurance, which is controlled by IDB, finished 1.4% higher. The insurer reported third-quarter net profit of NIS 160 million, turning around its loss a year earlier of NIS 240 million.

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